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Anettt [7]
3 years ago
14

The risk-free rate of return is 5 percent and the market risk premium is 12 percent. What is the expected rate of return on a st

ock with a beta of 1.4
Business
1 answer:
Kazeer [188]3 years ago
4 0

Answer:

Expected rate of return= 21.8 %

Explanation:

<em>The capital asset pricing model is a risk-based model for estimating the return on a stock.. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. Systematic risks are those which affect all economic actors in the market, they include factors like changes in interest rate, inflation, etc. The magnitude by which a stock is affected by systematic risk is measured by beta. </em>

Under CAPM,

E(r)= Rf + β×(Rm-Rf)

E(r)- expected return- ?

Rf-risk-free rate- 5%

β= Beta - 1.4

(Rm-Rf) - 12

E(r) = 5% + 1.4× (12%)= 21.8 %

Expected rate of return= 21.8 %

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Explanation:

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If your loan amount of money is high, if you choose a single payment, you will pay a lower interest.

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3 0
3 years ago
Why are medical related professions and human resources important​
strojnjashka [21]

Answer:

They Both deal with the Wellbeing of the Human Talent

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6 0
3 years ago
The following are selected 2020 transactions of Astin Corporation. Sept. 1 Purchased inventory from Encino Company on account fo
masya89 [10]

Answer:

inventory  50,000 debit

    accounts payable    50,000 credit

--to record purchase of goods--

accounts payable 50,000 debit

      notes payables      50,000 credit

--to record teh issued promissory note to setle the account--

cash                                  50,000 debit

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  notes payable                            54,000 credit

--to record the discounted note--

Explanation:

a)  we record the purchase as always.

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5 0
4 years ago
What are the different ways a business can merge
Artemon [7]

What type of skew is observed in this histogram?

<span><span> symmetry</span><span> zero skew </span><span> negative skew</span><span> positive skew 
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7 0
3 years ago
Hemisphere Corp. is considering a Build-Operator-Transfer (BOT) contract to construct and operate a large dam with a hydroelectr
Anna007 [38]

Answer:

The dam should be constructed. The investment discounted payback is 25 years.  

Explanation:

We have to make a cash flow for this case with the given data.  See the document attached.  

We consider an Initial cost of 30 millions in period 0,  then we have every periods benefit of 2.800.000 and 100000 direct cost.  

With those,  is obtained net cash flow for each year (period),  if we consider the given rate of interest, can be calculated the discounted cash flow

To know when this project covers all the investment,  we have to consider the cumulative discounted cash flow.  We have to see in the cash flow chart when the cumulative discounted cash flow break the 0 (became higher than 0).  

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Download xlsx
5 0
4 years ago
Read 2 more answers
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